Modelling the choice between and the costs of multiple-use vs. specialized forest management

Forests provide ecosystem services jointly with timber production. In some cases, private forest owners implement management actions in order to enhance the provision of such services. They may get direct benefits from this decision such as private amenity values or effects on (e.g., hunting), they may have altruist traits in their utility function for providing public goods (e.g., biodiversity conservation, carbon sequestration), or they may be incited for by a public authority and compensated for the costs. Specifically, this paper focuses on the decision of setting aside forest land. It raises the more general question of the efficiency of multiple-use vs. specialized management of forest lands. We propose an econometric analysis to identify factors of the set-aside choice and to measure the impact of this decision on forest management costs. A flexible cost function is modelled and estimated for both types of management. The percentages of old/mature deciduous and old/mature coniferous forests are used as biodiversity and carbon indicators. Results show that the set-aside choice depends on the landowners’ income and on their socio-economic characteristics. Set-aside decision has a significant and positive impact on the management costs. This implies that the additional private and public benefits achieved from specialized relative to multiple-use management should exceed this cost premium.